Real estate experts discuss refinancing, short sales and more

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GLENWOOD SPRINGS, Colorado - Nearly half of the mortgages in Garfield County are classified as "underwater," according to some analysts.

But local real estate experts say there are several options for homeowners who find themselves unable to keep up with their house payments but owe more than the house could now sell for.

From refinancing a home loan to modifying loan terms, area real estate agents, mortgage brokers and banks say they are open to helping people stay in their homes.

"There's some awesome refinancing capabilities out there," said Lisa Caskey of Mac 5 Mortgages in Rifle.

An online real estate marketplace, Zillow.com, reports that 49 percent of Garfield County's mortgages are underwater, meaning the homeowner owes more on the mortgage than the house is worth.

John Wendt, of the Mason Morse real estate firm, said he believes that number to be somewhat exaggerated.

But he conceded that regional housing data indicates that perhaps 40-50 percent of the county's homeowners are struggling to, or simply unable to keep up.

He said the first step for a homeowner with an underwater mortgage is to call the Colorado Foreclosure Hotline, at 1-877-601-HOPE (4763) to talk with a foreclosure counselor.

The Western Slope affiliate of the hotline, Grand Junction Housing Authority, can be reached at (970) 683-1057.

An equally important step, Wendt said, is to call the lender or a mortgage broker and try to work something out to either drop the interest rate, eliminate some of the principal, or make use of other debt management measures.

"Even if they're underwater a little bit, there are some banks willing to look at some kind of restructuring program," he said.

Wendt said several different programs offer help to homeowners dealing with an underwater mortgage:

• Refinance through the federal Home Affordable Refinance Program, or HARP. It's for homeowners who are not behind on their mortgage payments but are unable to arrange traditional refinancing because their home value has plummeted. This program expires Dec. 31, 2013.

• Modify the home loan though the Home Affordable Modification Program, or HAMP. It is for homeowners who are behind in payments on an underwater mortgage.

Restrictions apply. For example, the mortgage must be held by one of the two federal mortgage guarantee agencies, Fannie Mae or Freddie Mac, or others signed up to qualify for HAMP.

The HAMP expires Dec. 31, 2012.

• Deal directly with the mortgage lender. Homeowners should first try to work out a loan modification with the mortgage lender. If that's not successful, a homeowner may be forced into a "short sale." In a short sale, the house is sold for less than what is owed on the mortgage. The homeowner can hope the lender will forgive remaining balance.

Caskey, who said she has a steady stream of customers trying to work out a way to keep their homes, agreed that homeowners have options for getting out from under a problem mortgage.

Like Wendt, Caskey makes frequent use of the HARP and HAMP programs.

She acknowledged that short sales may be necessary, but she dislikes seeing homeowners being forced to move out of their houses due to hard economic times.

One helping hand, she said, can come from the Federal Housing Administration, a division of the federal Housing and Urban Development agency. The agency has slashed the cost of its mortgage insurance for loans written prior to May 31, 2009, Caskey said.

The reduced fees for refinancing, which amount to 0.56 percent of a loan's value, greatly reduce the costs of borrowing, she said.

"Every one I'm doing, I'm saving them a couple hundred bucks a month," she said.

Caskey said, "My first suggestion is to ask yourself, do you want to stay in your house?"

If so, she said, "There really are some great options just to save some money."